money What I think will happen next
What will this fall bring?
It was supposed to be a time when we returned to near normal, but clearly that won’t be the case. Yes, colleges and universities are open, so too are sporting events, movies, Broadway, and some offices too, but much of it is masked, fraught, and above all, subject to change.
Because while we’re all somewhat back to normal, you know what else is back? COVID-19. “People are very tired of COVID,” says Corinne McDaniels-Davidson, an epidemiologist and the director of the San Diego State University Institute for Public Health. “COVID is not tired of us.”
Preach.
For a time we appeared to be emerging from the woods. (Remember July 4?) But we were thrown back into it by the Delta variant, of course. The TSA, for instance, just reported that screenings at U.S. airports dropped to the lowest point since early May. (True there is seasonality at work, but passenger traffic is still 22% below 2019 levels.) Meanwhile, buried in Friday's weak August jobs report, was the fact that “restaurant and bar employment fell 41,500 during the past month, the first downturn for the industry in eight months,” according to the Independent Restaurant Coalition. “Restaurant and bar employment is still down 966,300 below its pre-pandemic levels.”
We all know too well that pit-in-the-stomach feeling when you get an email about a conference, concert, school play, (or in my case, the Maine Whoopie Pie Festival) being canceled. It’s a bummer — coupled with an economic cost. Imagine being a wedding planner in all of this, (and we talked to one, see below.)
So we’re kind of back to where we were pre-summer, or maybe worse because instead of waning, COVID-19 is waxing and while it's unclear whether Delta is more deadly, (see this excellent recent article from Yale University), we know it is more than 2x as contagious as previous variants, according to the CDC.
So what I want to explore here is what might happen this fall. What will be the course of the pandemic and of course, this being Yahoo Finance, what it might mean for the markets and the economy, and even more than that, our society. (To address that last point I’ve included some wise words from Singapore, so be on the lookout for that.)
First, some things are likely to happen this fall, come hell or high water or yet-to-named variant. Let’s start with a few select items from the calendar:
Sept. 6 — End of federal pandemic unemployment benefits
Sept. 9 — NFL opening day (more on that below)
Sept. 11 — 20th anniversary of the World Trade Center attack
Sept. 14-30 — UN General Assembly
Sept. 14 — Broadway reopens
Sept. 14 — California governor recall election
Sept. 22 — FOMC (Federal Open Market Committee)
Sept. 26 — German federal election
Sept. 27 — Deadline for U.S. House of Representatives vote on bipartisan infrastructure bill
Oct. 4 — Start of the Supreme Court term
Oct. 10 — World Mental Health Day
Oct. 11-17 — IMF Annual Meetings
Oct. 19 — NBA opening day
Oct. 26 — Start of the Major League Baseball World Series
Oct. 30-31 — G-20 Summit
Nov. 1-12 — UN Climate Summit
Nov. 2 — Gubernatorial elections in New Jersey and Virginia
Nov. 2-3 — FOMC
Nov. 18 — Latin Grammy Awards
Nov. 25 — Thanksgiving (Ahhh, yes…)
Not listed above are all the great TV shows, here and here, returning this fall, like “Succession,” “The Morning Show,” “Dexter” and “Insecure,” plus some cool newbies like “Impeachment” and “Dopesick” never mind “Real Housewives of Salt Lake City” and “Queens.” (Searching for shows has become a ritual, right?) Looks like we’ll have to wait until spring for new seasons of Netflix’s "Ozark," "Stranger Things" and "Bridgerton," btw.
Now, as promised above, and as an example of what we face in the months ahead, I want to drill down into America’s obsession, the NFL, (as opposed to America’s pastime, baseball.) Yes, the NFL kicks off next Thursday night (Cowboys v. Bucs), but, already COVID-19 has become a major factor this season. In July, NFL Commissioner Roger Goodell instituted new COVID-19 policies. First, games would be forfeited, not postponed (as they were last season), due to a COVID-19 outbreak, with the forfeit going to the team with the outbreak. (I take it that means a forfeited game would count as a loss.)
As far as testing players, this season vaccinated players get tested once every two weeks while unvaccinated players must submit every day. Unvaccinated players could face fines if they violate protocol. (This presumably is to incentivize players to get vaccinated.) The league is saying it would welcome a vaccine mandate but the players' union must approve it.
Meanwhile, the union has opened an investigation over Jacksonville Jaguars head coach Urban Meyer "telling the truth," as my Yahoo Sports colleague Dan Wetzel rightfully characterized it. What’s up here? Turns out Meyer acknowledged that whether a player was vaccinated factored into making roster cuts.
“That was part of the [decision-making process],” Meyer said this week. “... Is he vaccinated or not? Can I say that was a decision-maker? It was certainly in consideration.”
Remember when I used the word "fraught" earlier? This, ladies and gentleman, is the very definition of fraught. Let’s hope the NFL figures it out and COVID-19 becomes less of an issue for the league.
It’s a big question of course with no certain answer. As noted, Delta is more infectious, which suggests that we will see more cases as schools go into session, those offices reopen, and fans flock into, say, Bryant-Denny Stadium in Tuscaloosa (Alabama has one of the lowest state full vaccination rates at 34%) for the Crimson Tide/LSU game on Nov. 6. (See, I’m obsessed too.)
Just to give you an idea about the lack of certainty here, check out the following paragraph from a recent New York Times article:
“Expert opinion varies widely on the direction of the virus in the coming months. A number of national forecasts being tracked by the Centers for Disease Control and Prevention predict that cases will rise in the early weeks of September — but many foresee the opposite.” (Reminds me of my favorite stock market prognosticators, i.e., "the market will go up, unless it goes down.’)
A new McKinsey study titled: “When will the COVID-19 pandemic end?” suggests “the probability of reaching COVID-19 herd immunity in the United States is highest in the third or fourth quarter of 2021 but could shift.”
“I think the Delta is going to continue to be a disruption, probably even through the holidays," says Jessica Malaty Rivera, an epidemiologist with the COVID Tracking Project. Regarding our behavior this fall she says, “It’s kind of like looking at local public health data like you would check the weather. If things get bad in an area, adjust your behavior. Scale back risk and consider making sacrifices to keep yourself and others happy.”
“In epidemiology we almost always annoyingly respond with 'it depends,'" says McDaniels-Davidson of San Diego State. “With the Delta variant, we can look to other countries for clues but the U.S. is different. Cases are surging while we’re reopening schools without vaccination for under 12-year-olds. (I have three children under the age of 12, one is in quarantine right now. I might be salty today.) I don’t want to personify [viruses] but they like it when we’re all inside gathered together. That’s what happens in winter.”
Oh great. (Again.)
To my mind all this speaks to us really changing the way we think about COVID-19. Last Sunday, Singapore Prime Minister Lee Hsien Loong delivered his National Day Rally speech where he addressed this head-on: (Full speech here.)
“Now, eight in 10 residents are fully vaccinated. We are in a new situation. Vaccination has slowed the transmission and spread of COVID-19. But the virus has also mutated. The Delta variant is much more infectious. It is no longer possible to bring COVID-19 cases down to zero, even if we lock down for a long time. Therefore, we must prepare for COVID-19 to become endemic, like the flu or chickenpox. Fortunately, with vaccination and added precautions, we can live with the virus and become 'COVID resilient.' We may have to tap on the brakes from time to time, but we want to avoid having to slam on the brakes hard. So in the next phase, we will move step-by-step. Not in one big bang like in some countries but cautiously and progressively, feeling our way forward.”
Makes a ton of sense to me.
Singapore often gets these things right (not all things mind you), but enough of them, which is why Charlie Munger so often sings that small nation’s praises. It’s true that it’s easier for Singapore to get things done for all kinds of reasons, but that’s no reason for us not to emulate their mindset, if not their policies.
'Climbing a wall of worry'
In the meantime though, what are we to make of the stock market as we move through September? For starters, check out this wonderful note, written up in this story:
"Here comes the worst month of the year," warns one market strategist. “Although this bull market has laughed at nearly all the worry signs in 2021, let’s not forget that September is historically the worst month of the year for stocks,” says LPL Financial chief market strategist Ryan Detrick.
Fair enough. But as is oft-noted in the investment business, "past performance is no guarantee of future results."
More significant actually is that laughing-at-worry point Detrick made, because in fact the stock market is up a stunning 20% year-to-date, (which I mentioned in my trip to the Metaverse last week.) True the U.S. economy has rebounded from the worst of the pandemic, but it appears the market is up more than, well, what we are all experiencing. Why is that?
It’s directly related to the fact that the market is dominated by the FAAMG (Facebook, Amazon, Apple, Microsoft, and Google) stocks and other big, digital economy names, (such as Intuit, eBay, American Express, and PayPal) which are outperforming in this pandemic environment. As these companies’ businesses crank out record earnings, their stocks rise, lifting the overall market, which reflects these businesses more than the overall economy.
It’s also the case that the stock market sometimes seems to do best when it is said to be "climbing a wall of worry." That means investors see stock prices moving up, which makes them positively inclined to buy, but at the same time are mightily concerned about something — in this case COVID-19, which makes them cautious.
That sentiment produces incremental buying — a bit day-by-day — causing the market to rise gradually, though over time significantly, as opposed to one big irrationally exuberant blow out. Paradoxically, however, that could mean that if the Delta variant subsides quickly at some point, we might see one big burst of upside and then maybe a plateau or sell-off, especially as the Federal Reserve finally stops propping up the economy with low interests and by purchasing financial assets. (All of this of course is Exhibit A for not trying to time the market and always being invested.)
So what’s next exactly?
“I think that the market is still very optimistic that we’re going to have higher stock prices given we’re going to see trillions of dollars more in infrastructure support and in addition to that the Fed is nowhere near delivering an interest rate hike,” says Edward Moya, senior market analyst at Oanda. “There’s optimism that reopening will once again be the thing. But the market is very nervous given that we haven’t seen a major pullback in almost a year and you’re probably going to have that nervousness look to some catalyst."
“The market has done extremely well with uncertainty over the last 15 months or so, and I think the main reason is because the global punch bowl of stimulus has been overflowing,” says Moya. “That accommodation is getting removed. I anticipate one pullback where there might be 5%, then eventually that dip will be bought. There’s a lot of froth in the market. I think these valuation concerns are going to become a little more relevant."
And will FAAMG always lead the way? Maybe not if COVID-19 abates. “That’s the number one factor people are watching and you can see this in the performance of the more cyclical and mid-cap, smaller-cap names, and to some degree financials, transportation stocks, many of which have not recovered from where they were before the Delta surge,” says Mark Haefele, the chief investment officer at UBS. “We think that as the Delta surge subsides, that they will recover and so I think there is a connection. I think the work from home trade which has been doing better recently — that will fade again.”
So that’s the market this fall.
Finally, let’s turn to Anna Richardson Eischeid, who runs the Florida-based event business, Anna Lucia Events, which typically holds 10-15 large high-end events each year, including weddings.
First, what happened last year, Anna? “Everything stopped for us,” she said. “It went from full-on planning everything, full steam ahead for events and having to cancel, postpone, and move, move again, sometimes two to three times. We came to the realization that everything moved should be moved to late 2021.”
The business came back starting in April, Eischeid said, but now? “Everybody’s nervous. I don’t want to say it’s PTSD but they do see the kind of resurgence of some of these things happening again. The amount of work it’s added has been tenfold. It’s more stressful for clients. They’re already nervous about the perfect day, now it’s what if we have half the guest count?
“A lot of people have held off [holding events] and want to pull the trigger [later],” says Eischeid. “We’re completely booked for fall 2022.”
Maybe that’s when things will be fully back. Or maybe not. And really, that is the new normal.
This article was featured in a Saturday edition of the Morning Brief on September 4, 2021. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Andy Serwer is editor-in-chief of Yahoo Finance. Follow him on Twitter: @serwer
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